International Trade and Money Flows Can Increase Aggregate Supply and Aggregate

question 44

Multiple Choice

International trade and money flows can increase aggregate supply and aggregate demand if

• A)Trade barriers are increased.
• B)Trade barriers are reduced.
• C)Tariffs are increased.
• D)Quotas are increaseD.For example,if trade barriers are reduced,the increased imports allow aggregate supply to increase.Another example would be if money flows caused the value of the dollar to fall,then U.S.goods would be less expensive relative to foreign goods,which would increase aggregate demand.

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Definitions:

Scenario Analysis

Scenario Analysis is an analytical method used to examine different possible future events or scenarios and their potential impacts on decision outcomes.

Positive Net Present Value

An indicator that an investment is expected to generate more cash than its initial cost, leading to a profitable outcome.

Marginal Tax Rate

The marginal tax rate is the rate at which an additional dollar of income would be taxed, highlighting how much of the next dollar earned will go to taxes.

Financial Break-even Point

The level of earnings before interest and taxes (EBIT) where the company's total revenues equals its total expenses.